SACU and the Political Economy of Regionalism: Towards Deeper and Broader Integration?

This trade policy briefing by the South African Institute of International Affairs (SAIIA) examines the political economy of the Southern African Customs Union (SACU), focusing on the transition from a model of South African dominance to the consensus-based 'open regionalism' established by the 2002 agreement.

• SACU's historical durability was based on a pragmatic model where South Africa's decision-making dominance was balanced by financial compensation to smaller members via a common revenue pool.
• The 2002 SACU agreement shifted the union toward 'open regionalism' and consensual decision-making, requiring consensus among member governments on all substantive matters and establishing a full-time secretariat in Namibia.
• The 2002 agreement creates a strategic tension: reducing external tariffs to integrate into the global economy is likely to shrink the common revenue pool, which is the primary incentive for smaller members to remain in the union.
• The author uses game theory, specifically the 'prisoners' dilemma', to argue that mutual economic gains alone are insufficient to ensure regional cooperation; instead, formal institutions and the leadership of a member willing to bear costs are necessary.
• Expanding SACU membership to include countries such as Mozambique, Malawi, Zambia, or Zimbabwe could complicate internal cooperation, as new members might divert funds from the development component of the revenue allocation formula.
• To sustain the 2002 agreement's goals, SACU may need to replace direct financial transfers with new forms of compensation, such as regional infrastructure projects, common industrial policies, or increased development assistance from external partners.

APA

Alence, R. (2006). SACU and the Political Economy of Regionalism: Towards Deeper and Broader Integration? South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2008/11/Briefing-No_12_Alence_Final.pdf

Chicago

Alence, Rod. SACU and the Political Economy of Regionalism: Towards Deeper and Broader Integration? South African Institute of International Affairs, 2006. https://saiia.org.za/wp-content/uploads/2008/11/Briefing-No_12_Alence_Final.pdf.

Wikipedia

{{cite report |last1=Alence |first1=Rod |title=SACU and the Political Economy of Regionalism: Towards Deeper and Broader Integration? |publisher=South African Institute of International Affairs |date=12 June 2006 |url=https://saiia.org.za/wp-content/uploads/2008/11/Briefing-No_12_Alence_Final.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{alence2006sacu, author = {Alence, Rod}, title = {{SACU and the Political Economy of Regionalism: Towards Deeper and Broader Integration?}}, institution = {South African Institute of International Affairs}, year = {2006}, month = jun, url = {https://saiia.org.za/wp-content/uploads/2008/11/Briefing-No_12_Alence_Final.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }